McNab v. Mills

WASTE, C. J.

Plaintiff brought this action for the dissolution of a partnership alleged to exist between himself and the defendant W. L. B. Mills, for an accounting of their transactions and dealings, and asking that the property of the alleged partnership be sold to pay the debts, first, of the partnership; second, of the partnership to the plaintiff, and that the surplus, if any, be equally divided between plaintiff and defendant W. L. B. Mills. The defendants answered, denying specifically the allegations of the complaint with the single admission that plaintiff and defendant W. L. B. Mills owned the property described in the complaint, but alleging that they owned it in common, and that no part of it was partnership property. They denied that a partnership ever existed. On the issues thus joined trial was had, judgment was entered for the plaintiff, and the defendants have appealed.

[232]

The trial court found that the appellant W. L. B. Mills and his brother, P. L. B. Mills, purchased a ranch in El Dorado County, title to which was conveyed to them. The purchase price was advanced by respondent, as evidence of which he received a promissory note secured by a mortgage of the property, which he did not record. The ranch was thereafter operated by the brothers until June, 1922, when P. L. B. Mills conveyed to respondent McNab his undivided half interest therein and in the personal property used in its operation. The consideration for the purchase by McNab was a cash payment and cancellation of the note and mortgage as to P. L. B. Mills, but it was not the intention of the parties to this transaction that appellant W. L. B. Mills should be in any manner relieved of his portion of the indebtedness to McNab. The court further found that upon the consummation of this transaction respondent McNab and appellant W. L. B. Mills entered into an agreement by which they formed a partnership known as the “M & M Ranch,” the terms of the agreement being that the partnership assumed the indebtedness of appellant and his brother to McNab and that the M & M Ranch was to become the capital of the partnership and was to become partnership property; that after the formation of the partnership respondent was to advance such sums of money as the partners deemed necessary for the development of the ranch, the purpose of the partnership being to carry on the business of conducting, operating and developing the ranch as ranches were ordinarily operated in the vicinity; that it was further agreed that before any profits or assets of the partnership should be divided between the partners, respondent McNab was first to be repaid for all sums advanced by him, together with the original indebtedness of the partnership to him; that after the payment of this indebtedness to respondent the profits of the business were to be divided between respondent and appellant W. L. B. Mills, share and share alike; that respondent and said appellant would assume the joint management of the ranch. The court further found that the partnership was formed in accordance with the terms of the agreement and the ranch was operated and conducted by the partners as partnership property and was the property of the partners; that the indebtedness of appellant W. L. B. Mills and his brother, P. L. B. Mills, to